Economics and expectations of renewables in mines – interview with African Gold Group

ADRIENNE BAKER DIRECTOR Energy and Mines

African Gold Group CEO Danny Callow has discusses the drivers, economics and expectations of integrating renewables in to AFG’s gold mine in Mali

Danny Callow: Mali has limited grid power and most mining projects rely on power generated from diesel or heavy fuel oil generator sets. This is not only costly, at around 25-30c/kWh but also environmentally damaging in terms of emissions. By harnessing the power of the sun, through a solar and battery power plant, allows us to potentially produce up to 35% of our power requirement through green energy, and reduce our carbon footprint substantially. In addition, the blended cost of power can be reduced to around 15c/kWh and this results in potential massive savings on fuel alone for the project. In our case, in the region of US$5 million per year.

We do not profess to be energy experts and so we have teamed up with a service provider who builds, owns, operates and maintains multiple plants around the world. We see a partnership with this model where the experts provide the power at the lowest possible cost, we have no risk on the capital to build the plant and through a power purchasing offtake agreement we are provided with the power that we require, when we need it.

So in summary, reduced capital exposure, lower cost and significant reduction in our carbon footprint make this a very good decision to move forwards on.

DC: The remarkable aspect of a hybrid power plant is that it uses proven, off-the-shelf and reliable technology, which is guaranteed for much longer than the current life of mine. I think that many companies avoid the “green energy” discussion because they believe it is blue sky technology, expensive and unreliable. This couldn’t be further from the truth and the fact is that as more countries bring in stringent Carbon reduction targets, the more money is invested into the green energy sector which continues to bring down the cost of capital for these projects.

I believe that we will see huge advances in battery technology to store power from solar over the next few years, as well as step changes in efficiency of solar panels.

DC: I feel that constraints to service suppliers in the green energy sector are going to be the countries that have not set ambitious carbon-neutral goals and who are yet to embrace the benefits of green energy. Once governments decide to include green energy and allow independent power producers to feed into the national grid, we will see a huge demand for goods and services in this sector and a huge demand for additional supply of battery commodities far above anything we have seen before. This huge demand for these types of metals will result in investment in the mining industry and more opportunities for new mines to build green energy infrastructure into their plans. This huge investment opportunity will bring more efficient and effective technologies which ultimately will drive down the price of power. I see a very bright future for green energy suppliers over the next decade.